Sigma-Aldrich Strikes New 52-Week High - Analyst Blog


Sigma-Aldrich ( SIAL ) reached a new 52-week high of $96.77 on Feb 14, eclipsing its previous high of $95.78. Its shares clocked $96.61 at the end of the trading session on that day.

The lab chemical and life sciences company, which has a market cap of roughly $11.5 billion, has seen its shares pop roughly 27% over a year. Average volume of shares traded over the last three months is around 597K.

What's Driving SIAL Up?

Shares of Sigma-Aldrich are screaming higher following its healthy fourth-quarter 2013 results, reported on Feb 6. Both revenues and adjusted earnings for the quarter beat Zacks Consensus Estimates. Profit rose 13% year over year on record sales. Sigma-Aldrich witnessed organic sales gain across all business units in the quarter. The company sees improving trends in several of its businesses in 2014.

Sigma-Aldrich, a Zacks Rank #3 (Hold) stock, has racked up positive earnings surprises in all four quarters of 2013 with an average surprise of 2.23%. 

Sigma-Aldrich's significant investments in sales, marketing and R&D initiatives are generating demand for its products. The company is seeking to take advantage of country-specific opportunities by expanding its presence in high-growth emerging markets. It is actively expanding its foothold in the Asia-Pacific region, especially in the fast-growing emerging markets of India and China.

The BioReliance acquisition, which extended Sigma-Aldrich's reach into the promising new market of biologic drugs, should add to its growth in 2014. The company has also taken up cost control and plant process improvement measures and is effectively managing its working capital, contributing to healthy free cash flow generation.

Moreover, Sigma-Aldrich remains committed to offering returns to its shareholders through cash dividends and share repurchases. The company returned $249 million (51% of its net income) in 2013 to its shareholders in form of dividends and share buybacks and recently raised its quarterly dividend by 7% to 23 cents per share.  

That said, we account for persistent challenges in the company's research business and currency headwinds. Sigma-Aldrich's research business, especially with large pharmaceutical companies, is expected to continue to face challenges due to weak academic spending in the U.S. and Europe. Uncertainty surrounding academic funding (in particular in the U.S. due to sequestration) is expected to sustain through first-half 2014. 

Other Stocks to Consider

Other companies in the specialty chemical space with favorable Zacks Rank include  Globe Specialty Metals, Inc. ( GSM ), International Flavors & Fragrances Inc. ( IFF ) and NewMarket Corp. ( NEU ) with all holding a Zacks Rank #2 (Buy).

GLOBE SPECIALTY (GSM): Free Stock Analysis Report

INTL F & F (IFF): Free Stock Analysis Report

NEWMARKET CORP (NEU): Free Stock Analysis Report

SIGMA ALDRICH (SIAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GSM , IFF , NEU , SIAL

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